These are perilous times. The news is filled with stories of unemployment, foreclosures and bailouts. If you have a 401K or stock account, your retirement date just got pushed further into the future. According to the ADP employment report released today, 697,000 jobs were lost in February, 70,000 more than expected. It seems like bad news is the only news and our economic future is obscured by dark clouds. But the thing about dark clouds is they tend to have a silver lining, and that is the case now. The silver lining here is that homes are becoming affordable again – especially for first time home buyers, or those who don’t have a home to sell.

How affordable a home is depends on several factors, home prices, interest rates and your income among them. Here are 3 ways that homes are more affordable now:

Home prices are down – Over the years the expectation got baked into the market that home prices would always go up. As the bubble inflated, high home prices meant that borrowers had to allocate more and more of their income toward housing payments. Now we are seeing the flip side of this trend. Home prices have been moving down sharply over the last few years, and the most active homes on the market are foreclosed and short sale homes where the prices are marked down even further.

Mortgage rates are down – Mortgage rates are at historic lows. The lower the mortgage rate, the lower your housing payment, so this means you can buy more home for the same payment you could before, or lower your payments and spend less of your income on housing. Rates are low, but changes in the market mean not all borrowers will benefit. There are now Loan Level Price Adjustments, also known as pricing hits or add-ons, which raise the effective interest rate for many home buyers. But FHA, the biggest loan program for most first time buyers, doesn’t have these loan hits so the rates are still affordable.

Down payments are down – The amount needed for a down payment is a percentage of the home’s selling price. With home prices at their lowest point in years, this means that you need less for the down payment. Saving up for the down payment has always been the biggest obstacle to buying a home, so this is another way that lower home prices increase affordability. FHA requires a 3.5% down payment, so low down financing is still available.

Some (NAR) say that housing affordability is at an all time high, others say the index is skewed and we need to drop lower still before housing is truly affordable. But the bigger question is what is right for you and your situation. There is no guaranty that home prices won’t slip lower, but for most first time home buyers housing prices are bargains.

(Photo courtesy of Flickr -Julio Teixeira’s photostream)

Illinois Mortgage Rates                   First time home buyer loans               

We Lend in All 50 States

Free Mortgage Quote:

Get Best Advice from illinois mortgage broker

Contact Your illinois mortgage company Today

Find the Maximum FHA Loan Amount in Your Area Here illinois FHA loans

Are you Looking for first time home buyers loan ? Find Free Tips and Advice here

How to update yourself with Current chicago mortgage rates ? The Answer is here.

Looking for mortgage chicago il

Chicago FHA loans

We Offers illinois home mortgage Loans with best mortgage rates